Mortgage Through Bank or Credit Union. Which One is for You?

mortgage through bank or credit union

Updated - 2022.03.23

Choosing between a mortgage through a bank or a credit union when opening your financial accounts is something you may consider when making your decision. There are quite a few differences between these two options these days. Both credit unions and banks provide the same level of protection for your money through federally backed insurance.

When researching banks and credit unions, think about what is most important to you, like having many ATMs or having the best rates on your checking account. Discover the distinctions between credit unions and banks.

Mortgage Through Bank or Credit Union. Difference Explained

When you are getting a mortgage, you have a plethora of options, and they aren’t limited to big or local bank lending institutions. Credit unions are also expanding their mortgage lending operations.

Special Considerations

Up to $250,000 in insurance coverage is provided for bank and credit union accounts. Financial institutions, including banks and credit unions, are guarded by the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration.

Say you have over $250,000 to deposit. You can speak with a representative from the customer service department in the financial institution you have preferred. Make inquiries about the various account types that you can use to boost your accessibility to insurance coverage and other benefits. Taking the example of a savings and a checking account, both are eligible for insurance coverage of over $250,000.

Pros of Getting a Mortgage Through Credit Union

mortgage through bank or credit union

Fewer Fees

Credit unions are well-known for charging lower fees than other financial institutions. Credit unions are more likely to offer lower prices and interest rates than banks since they forward cash reserves to their customers.

Interest Rates

Credit unions frequently offer cheaper interest levels and annual percentage rates (APR) against the typical bank. That is true for mortgages and credit cards, personal loans, and other financial products. The interest rates are reasonable and do not interfere with one’s financial flexibility.

Product Offerings

Credit unions, particularly in the corporate banking arena, usually offer customers fewer products compared to banks, particularly in the consumer banking arena. Credit unions, which are typically smaller in size than banks, also offer lesser investment products, with savings and checking accounts, along with credit cards, as their primary offerings.

Member Benefits

When you make purchases with your credit card, you earn reward points. Now and then, you can exchange them for a perk of your choosing. Credit unions operate that way; members expect to receive benefits on a daily, monthly, and annual basis.

Becoming a member grants you exposure to exclusive insider discounts, regardless of the size of your account. It’s one-way credit unions go above and beyond for their members. Other benefits include;

  • Free mobile and online banking
  • Free online (or digital) bill pay
  • Personal financial aids for budgeting
  • Member Assistance Program
  • United partners like LifeLock provide discounts

Easier Credit Approval

It is acceptable to credit unions when your credit rating is less than perfect. They do not prevent you from obtaining a mortgage loan or putting down a decent down payment because you have less-than-perfect credit. As per the National Credit Union Administration (NCUA), the average credit score required to obtain a mortgage from a credit union was 753, which was less than the median credit rating required to obtain a mortgage from a bank.

Pros of Getting a Mortgage Through Bank

mortgage through bank or credit union.

There should be nothing wrong when using a bank or a mortgage broker for your mortgage needs. That’s not our preferred style, to be honest. Below are a few factors that influence people’s decisions between the two options.

Dedicated Mortgage Team

If you go to a bank rather than a credit union, your chances of discovering a designated mortgage division are pretty high. That is a critical distinction between the two classes of financial entities.

Banks have physical locations every so many miles. Credit unions are more likely than banks to offer remote services to their customers. The result is fewer routine client visits, which means fewer opportunities for building relationships with their interested clients.

Range of Financing Options

Banks typically offer a wider variety of financing services, you have more options when searching for a mortgage. When you sign up for the other credit derivatives- say, a credit card or maybe a checking account, you may be eligible for special savings from your bank.

Interest Rates

Always check with your credit unions and local banks when searching for any type of loan, no matter how small the amount you need. Even while online banks can provide lower interest rates than traditional brick-and-mortar financial institutions with an online presence, banks are typically unable to match the credit unions inside this sector.

Fees

As a result of their need to generate profits for their investors, banks seem to charge more and higher rates than lending institutions. In most cases, free deposit accounts at financial institutions are subject to restrictions, including minimal level account balances and requirements for other accounts, including credit cards and mortgages.

Additionally, costs for errors, including a rejected check or overdrawn accounts, are typically greater in banks—mainly if you are not eligible for a premier account. Once again, while investigating banking fees, it’s critical to contrast online banks from brick-and-mortar companies to make an informed decision.

The Bottom Line: Mortgage Through Bank or Credit Union?

Smart Overview: Mortgage through Bank or Credit Union.

Mortgage Through Bank or Credit Union. Which One is for You?

When you have to secure a mortgage, you have many options. While many credit unions offer competitive financing and savings rates in addition to financial planning services, they are more likely than banks to provide customers with personalized service — and education around money management and financial wellness. Plus, although credit unions aren’t-for-profit entities, they can generate income by investing their excess funds. Banks most likely offer a greater variety of products and services and more sophisticated technology. These and other considerations often help you determine which institution can best meet your needs.

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